UPDATED: Champagne blesses Rogers-Shaw wedding; critics bemoan ‘dark day’

OTTAWA–Innovation, Science and Industry Minister François-Philippe Champagne is permitting the transfer of Freedom Mobile licences from Shaw Communications Inc. to Quebecor Inc.’s Videotron division. He announced a 21-part package Friday that imposes conditions on Shaw suitor Rogers Communications Inc., which includes establishing a Rogers headquarters in Calgary, Alta., and the creation of 3,000 new jobs in western Canada. “Today I am informing Canadians that I have secured on their behalf unprecedented and legally binding commitments from Rogers and Videotron,” the minister said at a morning news conference. “And, after imposing strict conditions, the spectrum licences of Freedom Mobile will be transferred to Videotron.” In addition to the headquarters and jobs requirements, Rogers will be told to invest $1 billion to expand broadband access; invest $2.5 billion enhancing the 5G network in western Canada and $3 billion in additional network service expansion; and expanding access to low-cost internet plans and launching a new low-cost wireless plan for low-income Canadians. Terms placed on Videotron include: offering mobile rates 20 per cent cheaper than incumbent brands; non-transfer of the Freedom licences for 10 years; expansion within two years of the 5G network in Freedom’s territory; moving into the Manitoba market through a mobile virtual network operator (MVNO) agreement; and a 10 per cent increase in data allotments. Failure to comply with the conditions will lead to fines of up to $200 million for Videotron and $1 billion for Rogers. The two companies have entered into a MVNO agreement which will help the Quebec firm compete. Champagne said he wants to see other major players enter into similar agreements with smaller carriers. The minister also announced a moratorium on large scale spectrum transfers and ordered a review of the country’s spectrum transfer framework. It has been nearly 10 years since such a study has been undertaken, he added. Asked if BCE Inc. and Telus Corp. should be paying attention to the government’s moves, Champagne was unequivocal. “Well listen, I hope you, I hope they're listening. I bet they were listening,” he told reporters. “But I hope they get the message that that this government is committed to drive down prices. I have been using all the tools that I can find in my toolbox to bring prices down for Canadians.” Minutes later Rogers, Shaw and Quebecor issued a news release stating that they hoped to close the deals “expeditiously”. Rogers and Shaw said they expected to close their takeover deal by Apr. 7. Market reaction was positive. In a note titled “Uncorking the Champagne as ISED finally approves the Shaw and Freedom Transactions”, Adam Shine of the National Bank of Canada highlighted that it took over two years for the Rogers-Shaw merger to come to fruition. “ISED’s approval was the last required by the companies, and it came on Mar. 31 which represents the seventh outside date that kept getting extended over the past year,” Shine wrote. “It looks like the companies just extended the outside date one more time to Apr. 7 to allow more time for the closing of the deals.” TekSavvy Solutions Inc. currently has an application before the CRTC protesting the off-tariff agreement between Rogers and Videotron. Shine noted that this proceeding was separate from ISED’s decision-making process. The opposition parties came out against the deal, with one citing the ongoing commission hearing. “Conservatives demanded that the decision be delayed until the CRTC could rule on the TekSavvy complaint of unfair wholesale access to Videotron from Rogers, but the Liberals have reversed themselves yet again,” Tory MPs Rick Perkins and Ryan Williams said in a statement. “On Dec. 3, 2022, minister Champagne stated that he would rule on the deal ‘only after there is clarity in the ongoing legal process.’” NDP leader Jagmeet Singh also punned on the minister’s name in his denunciation of the approval. “Right now, Rogers and Shaw CEOs Tony Staffieri and Bradley Shaw are popping the champagne corks and toasting the Liberal government for the helping hand,” Singh stated in a news release. “Justin Trudeau and his team are showing once again that when push comes to shove, they are taking the side of the rich and powerful over the interest of working people.” For its part, TekSavvy Solution Inc. pointed out that the Competition Bureau and the House of Commons Industry Committee both opposed the merger. The bureau lost its case before the Competition Tribunal last year. “The minister approved this anticompetitive merger despite the CRTC’s ongoing investigation,” the company’s VP of Insight and Engagement Peter Nowak was quoted as saying in a news release. “In the middle of a cost-of-living crisis, this decision further consolidates Canada’s telecom market and guarantees even higher prices for consumers.” TekSavvy listed a litany of recent takeovers in the sector, including Bell’s purchases of Ebox, Distributel and Primus; Videotron’s takeover of VMedia; Telus buying Start.ca and Altima; and Cogeco scooping up Oxio. Within minutes of Champagne’s news conference ending, OpenMedia issued a release condemning the move to approve the merger. “This is a dark day for the internet in Canada,” executive director Laura Tribe said. “Today’s decision is the largest blow to telecommunications competition and affordability we’ve ever seen. Minister Champagne has turned his back on Canadians and has crowned Rogers the effective ‘king’ of Canada’s internet.” John Lawford, executive director at the Public Interest Advocacy Centre, also criticized the announcement. “The promise is a ‘new national fourth player’ wireless company and lower prices for cellphone service–this is smoke and mirrors,” he said in a statement. “We do not believe the conditions obtained by the minister can counteract the anti-competitive effects of this merger on Canadians, and will lead to another decade of high wireless prices for Canadians.” “Such commitments amount to deckchair arrangement on a sinking ship of traditional players in identical market positions,” he added. –Reporting by Paul Park at ppark@thewirereport.ca and editing by Michael Lee-Murphy at mleemurphy@thewirereport.ca

UPDATED: Champagne blesses Rogers-Shaw wedding; critics bemoan ‘dark day’

News | March 31, 2023

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UPDATED: Champagne blesses Rogers-Shaw wedding; critics bemoan ‘dark day’

News | March 31, 2023

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